Financial statement analysis and interpretation

Introduction

Regulatory bodies require companies to prepare financial statements, as they assist a wide range of users in financial decision-making. In this course, you will learn how the users of financial statements draw inferences about the financial position and performance of the reporting entity. To understand the information presented in financial statements, users need to carry out different types of analysis.

You will be introduced to a variety of techniques that can be used to analyse financial statements. The type and nature of that analysis will depend on the information needs of each user. You will learn about ratio analysis, vertical analysis, horizontal analysis, segmental analysis and the analysis of historical data as key tools in the analysis of financial statements. You will learn how to carry out financial analysis using profitability, liquidity, solvency, and efficiency ratios whilst evaluating a company’s performance.

You will look at the annual reports of various companies and analyse aspects of their financial statements.

This OpenLearn course is an adapted extract from the Open University course BXI250 Intermediate financial accounting [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .